No cost? Not quite: Self-funded Pa. website contract costing up to $2.6M

By Melissa Daniels, PA Independent

Friday, May 17, 2013

HARRISBURG — A state lawmaker continues to raise red flags about a website redesign and management contract.

Rep. Rob Matzie, D-Beaver, said this week he’s concerned the administration of Gov. Tom Corbett knew it would pay millions to NIC USA, a government website design and management firm, even though the contract was entered as a “self-funded” agreement.

NIC provides “eGovernment” services in 28 other states, all of which operate on a self-funded model, relying on fees added to transactions business and individuals may make online.

Pennsylvania is the only state to authorize a sole-source contract.

Matzie said three work orders totaling about $2.6 million are proof the administration knew this contract would cost the commonwealth, and that it was not self-funded, as the contract originally described.

“They knew there was going to be payments ahead of time, based on the dates,” he said.

The first fee under NIC is a $2 charge on driver and vehicle records insurance companies obtain from the Pennsylvania Department of Transportation. A work order, dated Dec. 20, authorizes the state to pay NIC those fees on a monthly basis, though PennDOT was not yet operating on a platform run by NIC. That overhaul wasn’t authorized until mid-January.

“That work order should’ve been the first work order, not the work order that went in for the payment,” Matzie said. “It’s all over the board.”

The $2.6 million in scheduled work-order payments are under review by the office of Treasurer Rob McCord. Matzie earlier this year asked to freeze the payments, but he has yet to hear whether Treasury would sign off.

Matzie said if this contract were competitively bid, the state would have had a better opportunity to see what services are available. He believes the General Assembly should have the ability to approve adding fees to online transactions, instead of the administration approving them as part of the contract.

Dan Egan, press secretary for the Office of Administration, said the state had no intention to pay NIC anything other than what it would receive through the self-funded process.

But the state decided to hold off charging its first convenience fee until July 1 this year, out of deference to the insurance agencies that would be paying the fee. Additionally, the state wanted NIC to continue working on its websites. The service on the state’s current web portal, which runs all the websites the state control, will expire in 2015.

“Originally we wanted it to be self-funded and out of the gate, but with the timing on the horizon and wanting to wait with the insurance industry, we soon found ourselves in this position,” Egan said. “We needed to get them working and moving websites over.”

Pennsylvania Interactive will handle virtually all of the websites and their needs, including hardware, web design, program management and real-time online services. Part of the upgrade will include an additional back-up server for main web pages, which would prevent hours-long outages like those experienced on Tax Day that disrupted the filing deadline and led to a one-day extension.

All of that takes several months to develop and implement, Egan said.

“It’s not going to be one of those things where you wake up one day and all the websites are new,” he said. “It’s going to be one at a time, a gradual process.”

Egan said web users can expect to start seeing changes in the state’s website by the end of June, starting with PA.gov and executive branch sites.